DEFINITION OF A CHARGING ORDER

Charging orders are filed at the courts by a creditor in order to secure a money judgement ordering the debtor to repay what he owes.

Whenever a charging order is filed, it automatically acts as a safeguard for the debt. That is to say, it becomes a "security" for the debt, much as a mortgage acts as a security for the house or the land.

Before a charging order can be issued, a hearing must take place in court. There are several ways to can prevent a charging order from coming into being.

In this report, you will find a description of country court procedures on charging orders, and the steps you can take when creditors file a petition to serve you with a charging order after suing you in High Court. This report will tell you what to do if you suspect a charging order has been filed against you and you are unsure of the next move you should make.

A CREDITOR CAN PETITION THE COURTS FOR A CHARGING ORDER WHEN…

There are two instances when a creditor can request the court to issue a charging order. One of these is when they already have a county court decision against the you, the debtor, where you are compelled by the court to pay the debt in what is known as a "forthwith" judgement. This means payment of the debt must be made in full straight away, or at a particular date set by the court.

Another case is when there is a previous judgement against you for payment of the debt in instalments, and you have defaulted on one or more of them.

However, if you are currently paying your debt in instalments as ordered by the court, and you have not missed a single one, the court cannot issue a charging order. This is based on the decision in the 1997 landmark case of Mercantile Credit Co Ltd versus Ellis involving debt payments and charging orders.

THE PROCEDURE FOR FILING A CHARGING ORDER APPLICATION

There are two stages in the filing of an application for a charging order:

FIRST STAGE: THE INTERIM CHARGING ORDER

Whenever a creditor applies for the issuance of a charging order against you, the court shall first establish that you partly own or have an interest in the property that is the subject of the charging order. After ascertaining this fact, the court shall release an interim charging order.

Please note that this is NOT the final charging order itself. The court can give this order, with a duplicate sent to you, even without a hearing. A date is then set for a full hearing after the interim order has been issued.

After approximately 21 days, the District Judge should be able to set the hearing to decide on the the issue of whether to make the interim charging order permanent or final. This hearing normally takes place within the private rooms of the District Judge.

Apart from this, the Land Registry will be furnished with a copy of the interim charging order against you. This will serve as a "caution" on your property preventing you from disposing of it prior to the hearing. The Land Registry will likewise inform you of this "caution" in writing.

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